News & Analysis
Gold Collapse ... the Bubble Is Pricked?
Gold prices plunge overnight – is the rush over? ... Has the gold boom come to an end? The price of gold, which has climbed for years like a blood pressure reading for anxious investors, plunged overnight to its lowest level in three months. Gold fell almost $US58 to $1,614 per ounce. It has declined 15 per cent since September, when it hit a peak of $1,907. It had more than doubled from the financial crisis three years earlier. The decline on Wednesday came on an ugly day in the stock market. The Dow Jones industrial average lost 125 points a day that last year probably would have caused fearful investors to buy gold as a protective investment. "It's difficult to forecast, but I think the gold bull market is over," said Cetin Ciner, a professor of finance at the University of North Carolina-Wilmington. He likened the surge in gold to dot-com stocks before they collapsed. – New Zealand Herald News
Dominant Social Theme: It's over. The bubble is collapsing.
Free-Market Analysis: It really gets repetitious after a while. When the stock market falls, pundits don't immediately shout, "The bubble is over!" No, there are anxious meetings and grave headlines.
We are to assume that if stocks fall something is wrong with the larger economy. But if gold and silver drop within the current context, we are supposed to feel relieved.
That's because the power elite that wants to run the world has spent the past 100 years demonizing gold and silver. The idea that people can simply dig up gold and silver and grow wealthy is anathema to the elites.
The main thrust of the elites in the 20th and now the 21st century is to control the way people make a living. The idea is to give people no choices, apparently, but those that support the onrushing globalism.
If you are a lawyer, you support the penitentiary-industrial complex. If you are a teacher, you support a curriculum that ruins your students' minds. If you are a doctor, you do little that is not approved by Big Pharma – which is, of course, an elite enterprise.
This is, in fact, why the elites hate and fear gold and silver from the perspective of mass ownership. Dig up gold and silver and you have made yourself wealthy without becoming entrapped in the larger dialectic that the elites have established.
Of course, those who are partial to government as a generally positive paradigm don't see it this way. The Greenbackers and others are convinced that the elites want a return to a universal gold standard. But these prognosticators make no differentiation between a private and state gold standard. One emerges coherently and the other is imposed.
In fact, in a purely private economy, Greenbackers and Social Creditors would likely get a chance to implement their schemes. Here at DB we favor such monetary competition. We simply believe that historically speaking gold and silver would emerge at least as a considered alternative. Bi-metallism is an ancient and successful standard. The US was founded on it, in part.
As for the top elites, the dynastic families that maintain their power and wealth by apparently controlling central banks, it is certainly possible that they want a state-mandated gold standard. But more likely they seek a global currency created out of IMF SDRs. Top men have stated this on numerous occasions.
A PRIVATE metals standard would surely NOT be to their liking. For one thing, no matter how much gold and silver they own, a private-market monopoly is impossible to sustain absent the dead hand of government.
If the elites try to drive up the price of money metals by hoarding gold, other supplies shall surely emerge from other hoarders or mines themselves. This is an ironclad rule of markets. When there is access to a good or service within a private economy, it is not possible to "corner" the market.
Also, there is plenty of gold in the hands of non-elites. To ignore the holdings of Indians and Chinese (in addition to Western holdings) is to make inaccurate and even contemptuous assumptions.
Of course ... the elites will do what they can to suppress the price of gold – and silver. They will continually manipulate the price downward as they've been doing and they will use their control of the mainstream media to further cast doubt on the value and ascension of precious metals. Here's some more from the article:
Some investors buy gold as a hedge against inflation, and minutes from a Federal Reserve meeting that came out on Tuesday afternoon suggested that the central bank believes inflation is under control.
Gold's attraction as an asset of refuge during crises also seems to have diminished. The economy has picked up, and worst-case scenarios in the United States and Europe have faded.
"Fear has been gold's best friend, and so to the extent that fear is dissipating, gold should fall," said Jim Paulsen, chief investment strategist at Wells Capital Management. "We might look back at these Fed minutes as the line in the sand."
Gold has been hit in recent weeks by a strike by gold sellers in India, the world's largest buyer of physical gold. Another bearish sign was a surge on Wednesday in the US dollar, which tends to rise when gold falls.
Gold fetched only $300 to $400 an ounce during the 1990s but climbed steadily last decade. It took off in late 2008, when prices for stocks and corporate bonds plunged, wiping out years of savings and even money market funds looked suspect. Investors bid up prices for the safest of assets, like US Treasury bonds. Others turned to gold.
Such articles as these are often full of obvious misinformation. Gold and silver began going up around 2001 not 2008. And gold and silver are both worth about ten times what they were a decade ago. Meanwhile, stocks have not moved nearly so much.
Gold is not in a bubble, certainly not yet. Gold and silver constitute a bull market in money metals. Paper assets, meanwhile are in a bear market. These assets' rotations are part of the business cycle and have nothing to do at root with "bubbles."
There will likely be gold and silver bubble at some point. The precious metals business cycle bids up the physical and then the paper. Eventually, the small junior mining stocks come into play. That 's when the blow off takes place, eventually. But there is no evidence of this yet.
In fact, gold and silver, while moving up, are still tracking the larger stock market. The divergence between the two markets has not yet taken place, as it did eventually in the 1970.
We figure there are several years to go yet, though there is always the possibility that those elites trying to manage the world's larger economy will turn to outright confiscation at some point. We don't see how they tolerate US$5,000-an-ounce gold.
But the elites have no wish to explain such things in detail via the mainstream media they control. They'd rather reignite paper assets if they can. And in the meantime, they wish to keep people ignorant about the larger destructive workings of monopoly fiat money.
Conclusion: The Internet – and what we call the Internet Reformation – is making that increasingly difficult.
Updated on date of publication.
Posted by Bischoff on 04/15/12 03:04 AM
"Human action"... .don't make me laugh.
That the vast majority of people across the world would take gold in payment of debt over any other commodity, doesn't seem to impress you.
You say gold isn't money. So, what is money then... ??? Why is gold being dug up at the rate of 3,000 tons per year... ??? Why are there 150,000 tons of gold stored in vaults all over the world... ??? What's the reason for that stupity... ???
Can you enlighten me... ???
You've already told me that it is not money. So, can you tell me what these tons of gold are... ???
Posted by samson on 04/14/12 11:42 PM
Oh ,sorry. The Elites can also confiscate your gold any time they wish.
Posted by samson on 04/14/12 11:24 PM
To you respondent precious metal experts. Sorry to burst your bubble,oops,
Yes, gold is in a bubble ready to burst. Gold is only a temporary store of
value, for the few who bought it before 2004, that is if you sell it this week. I've been around for 87 years, and seen the Kondratief cycles evolve.
Just like fiat money, it's fraught with high risks, depending on when you are lucky by catching the left base of the Bell curve and selling before the
slippery slide down. It pays no dividends. You pay storage.
The mass of it is held by the OWO elites, who hold the key to any value it has. They are confirmed manipulators of fiat currencies of which have no aquisition
costs, and force down your throats because they have the power to do so,
so why will they give their treasure trove away that they purchased with worthless paper??? Think about it. If you have any, better sell it. It's going back down to four hundred dollars very soon.
Reply from The Daily Bell
Sell gold and buy dollars, eh?
Posted by clark on 04/14/12 03:11 AM
Bischoff wrote, "only, if there is an objective value that can be used as the base."
And that's your stumbling block. There's no such thing as an "objective value" Everything is subjective when it comes to value. Every-thing! You even acknowledge this when you commented on my hypothetical island situation by saying, "let them".
You want to use gold as a measuring stick and say it is absolute when it is not the measuring stick that matters but rather it is the distance between the lines on the stick that are what matters.
It's a lot like a "foot", at one time a foot wasn't determined by a ruler, it was determined by an actual foot.
Same with the height of a horse, it was measured in hands. Who's hands? It depended on those who measured and agreed upon the value. A.k.a. the market.
Pounds were the same way as I recall.
A string can be used to measure an inch the same as a golden rod. It's up to the individuals - which - they choose to place value upon. One is more transactional than the other, however; Money is what People say it is.
Right now, very few People say money is gold.
Walk into any Mall in America and ask them if they take gold as money?
Gold is a valuable thing to store, but gold is not money. Not now anyway.
Human action seems to be something you do not like, however; it is not something you can factor out of an equation as if you were computing a math problem,... such as you try to do with your world joules average.
Posted by Bischoff on 04/13/12 04:28 AM
While the Austrian economists, primarily Menger with the Marginal Utility Theory of value have it over the labor theory of value by Ricardo and Marx, there is one problem. The MUT applies only to one half of consumer market participants. You can determine the value of anything subjectively with the MUT, but not without the producer/seller bringing goods to market.
The producer/seller will only bring goods to market, if he can make a profit. He can only know whether he made a profit, if he can accurately calculate his costs. That is possible only, if there is an objective value that can be used as the base. The "objective" value of Gold is that base. Austrian Economics and the MUT are a good thing, but without the Austrians reccognizing the need for the gold standard, they can't go anywhere.
The German economists, like Heinrich Rittershausen understood the problem with the Oesterreicher and their MUT sans the gold standard. That is why they made sure that they themselves weren't tarnished with the shortcoming of the Vienna School. That's why they called them the "Austrians", so there'd be no confusion since both of them wrote their treatise in the German language.
Of course, then came Hitler, and the German economist profession took a set back until after WW II was over. When the Germans wanted to return to the gold standard at the rime of the creation of the new Deutsche Mark in 1949, the American Occupation Authority catagorically rejected it.
I wonder why... ???
Posted by Bischoff on 04/13/12 03:52 AM
C: "What If the Government Rejects the Constitution?"
B: You mean it hasn't already... ???
Posted by memehunter on 04/13/12 01:48 AM
Ingo, thanks for this explanation.
"Gold as a store of value seems to have found a place in your mind. Now, see if you can find a place for gold as being a measure of value."
But is there really such a thing as an objective measure of value? To my mind, this is the big question. Ironically, I think I may be closer to the position of Austrian economics on that one in that I would prefer to talk about subjective value. I admit I would have to think more about it (I certainly cannot claim to have read as much as you did on the topic), but I am not convinced about an objective measure of value.
Posted by clark on 04/13/12 12:30 AM
Bischoff asked, "BTW, how do you know I haven't read the crummy sites you reference... ???"
Becasue you've said as much, many times.
You dismiss facts and logic which you (likely it seems) haven't read, doing so is being a Mr. Know-it-all.
Bischoff wrote, "In your case, you don't have an opinion. All you have is links."
What's to say the links aren't my opinion as well?
The links provide the facts and lay out the logic, all of which you claim I fail to show.
Bischoff wrote, "I refuse to argue through surrogates."
You've got it wrong. It has nothing to do with who is writing what, it's just about the facts provided. F.Y.I. that's how the internet works.
What if your core beliefs as to how the world works, are wrong?
"What If the Government Rejects the Constitution?"
Click to view link
Also, Gold is not money.
Posted by Bischoff on 04/12/12 09:25 PM
C: "Ok Bischoff, so you're set in your ways, you're stubborn and refuse to consider other work which shows your position is wrong. I get it, Mr. Know-it-all."
B: No, you don't get it at all. You say, "... you're stubborn and refuse to consider other work which shows your position is wrong". Before I come to a position on a subject, I study, and I collect facts. I make up my mind when I've gathered enough facts and information. That may include a reading dozens of books, looking at lots of web pages, and having discussions with other people, before I make up my mind about a subject. There is no doubt that may conclusions are based on my core believes as to how the world works.
You call me a "Know-it-all", because I hold strong opinions. How crazy is that... ??? I believe there is an infinite number of ways to look at a subject, but which ever way you look at it, it has to be logical and factual, if you want to call it true. What you want me to do is to read another website so that I might doubt the way I see things logically and factually. What kind of crap is that... ???
Look, if you don't have any core believes, and you are unable to collect facts and information to come to your own conclusions, don't bother to shove a bunch of links in my face so I can read up how stupid I am. If you can not argue with me about facts, don't hold yourself out as having an opinion or a core believe. Hinding behind somebody else's opinion is not stating your own opinion, it is a copout. BTW, how do you know I haven't read the crummy sites you reference... ???
C: "Yet you try to insult me, because I can't distill 400 pages into a one paragraph sound-bite. I see. Words written by others backed up with references and facts is not good enough for you? Psft."
B: I don't take pleasure in insulting you, but you insult me with your links, and with your excuse that you are unable to argue yourself, and that you need to argue through surrogates. You are upset with me that I refuse to argue through surrogates. To ask me to do that is insulting to me. As regards insulting you, I have restrained myself considerably, if that makes you feel any better.
C: "... and you come across as childish by resorting to labeling Dr. North's and others writings as "stupid" because you don't feel like looking into it more."
B: I have read Gary North's writings before you were born. There is a lot about which I totally agree with him. Amongst the libertarian crowd, he is one of the most logical. I know his positions. I don't have to look them up every time there is a discussion about them. Next time you have something to say about a view point that involves Gary North's points of view, just lay it out there. I am sure I'll have an opinion about it without having to read your link reference.
C: "Condemnation without investigation is the height of ignorance."-- Albert Einstein "
B: Cute. However, I don't condemn anybody's opinion which is honestly held. Everybody is entitled to their opinion. Whether it is based on logic and facts is another matter. In your case, you don't have an opinion. All you have is links.
Posted by clark on 04/12/12 08:23 PM
Ok Bischoff, so you're set in your ways, you're stubborn and refuse to consider other work which shows your position is wrong. I get it, Mr. Know-it-all.
I didn't ask you to read everything on the internet, just a few pages. How hard is that?
Yet you try to insult me because I can't distill 400 pages into a one paragraph sound-bite. I see.
Words written by others backed up with references and facts is not good enough for you? Psft.
I'm not relying on anyone to make up my mind, once again you're assuming too much.
This conversation has Nothing to do with guts. I find it bizzare you try to frame it that way and you come across as childish by resorting to labeling Dr. North's and others writings as "stupid" because you don't feel like looking into it more.
"Condemnation without investigation is the height of ignorance."-- Albert Einstein "
Reply from The Daily Bell
Dr. North may be a lot of things, but stupid does not come to mind.
Posted by Bischoff on 04/12/12 06:19 PM
M: "The reason why gold is an excellent store of value has very little to do with "the amount of joules required to mine and refine a certain amount of gold [being] constant" (assuming for the sake of argument that it is true), it has far more to do with gold's durability, fungibility, and high stock-to-flow ratio."
B: Memehunter, I love you. Little by little, and inadvertantly you are stumbling toward the truth.
Of course, you are absolutely correct that, "The reason why gold is an excellent store of value has very little to do with the amount of joules required to mine and refine a certain amount of gold". It has to do with the physical and chemical characteristics of gold. I am glad you got this concept down.
Now, let your mind work on the fact that the amount of work required to dig up an ounce of gold has not varied over millenia. The gold mined thousands of years ago was easy to get to. Large veins of gold to which physical labor (human exertion/work) was applied with primitive capital resulted in let's say an ounce of gold. That same ounce of gold is mined today with little physical labor (human exertion/work), but with very sophisticated capital which of course required physical and mental labor (human exertion/work) to create and to maintain, before a single ounce of gold could ever be mined.
Business schools today depend entirely on research funds from central bankers. What do you think, would they fund a scientific study to prove me wrong, much less to prove me right... ???
It is the amount of work required to dig up 1/20.65 of an ounce of gold which the Congress set in 1791 as the standard of value to be called "One U.S. Dollar".
Before AJ gets upset, I want to emphasize that I do accept that the Congress set the value in grains of Silver equal to the Spanish Silver Pillar Dollar, but also at the market value of gold, which at the time was 1/20.65 of an ounce of gold for one Spanish (U.S.) Silver Dollar.
The Constitution prohibits states to make anything, but gold or silver "legal tender" in payment of debt. The Constitution doesn't say anything about this subject with regard to the Federal Government. That fact was exploited to produce our irredeemable currency by the federal government, even so it flies in the face of the 10th Amendment provision.
However, the states were bound by the Constitution, and unless their paper currencies were redeemable in gold or silver, such currency could not be used in contracts and to meet debt obligations. It would be nothing but your Mutual Credit currency, IOW "barter scrip". Therefore, they issued bank charters to require paper currency to be redeemable.
Gold as a store of value seems to have found a place in your mind. Now, see if you can find a place for gold as being a measure of value.
Trick: Think of an amount of work (the amount of work required to mine and refine 1/20.65 of gold) and make this the standard of measure called "One U.S. Dollar", just as if you were to take a certain length of a titanium rod and call it a "One linear Meter".
Then you can measure any work against the standard and come up with a "price". If you can assimilate the concept of gold allowing a standard of measure, I'll then explain to you how Austrian Economics (Carl Menger) contributed to the discovery of "prices" (value/work performed) through the application of "Marginal Utility Theory".
However, Marginal Utility Theory to discover prices in the consumer markets only applies to the buyer, not the producer/seller. That's the shortfall of Austrian Economics. It's the gold standard that determines what the producer/seller does in the markets.
I'll explain it to you when you're ready. Please don't consider me patronizing. I just want to share my understanding for the benefit of people, as Weebley would say... ..LOL
Posted by Bischoff on 04/12/12 05:33 PM
C: "If you're not even going to bother reading the link "Constitutional Convention of 1787 was in fact an illegal coup d'état." ... then how the heck can you even comment on it, and especially like that?"
B: If I were to read every stupid contention about the Constitutional Convention on websites across the internet, I'd have nothing else to do all day long.
I have studied the Constitutional Convention. I know how it came about. I have studied the lives of most every delegate at the Constitutional Conventionon. I have a formed a firm opinion about the forces and reasons behind convening or opposing the Constitutional Convention. I have stated this opinion frequently here in my comments. I hope I did do so clearly.
Now, you come along with some website you want me to read so that I can reconsider my opinion. My opinion is set. I don't need some other jojo's opinion to doubt my own.
However, I am most happy to have you disagree with opinion, as long as you can tell me why. Do you have enough guts to do it yourself, or do you need to push some jojo's opinion as your own, so that that you can blame the stupidity of it all on him... ??? Stop inserting stupid links which I am supposed to consider before I have a right to hold a firm opinion. Where do you come off that I should be required to read somebodies diatripe to voice an opinion... ???
If you don't like my opinion, and you have something to say about it, say it. Don't sent me to some stupid website. Give me your contrary opinion right from the horses mouth, and I will be happy to reconsider my opinion based on the logic and facts you present. Otherwise, leave me alone with insisting that I read some stupid link.
C: "You were just given an example of how this is a false statement, i.e. dredging in South America. Therefore the value of gold is Not constant."
B: That example came from Weebley. Weebley is no dummy at all. He knows exactly that I am correct. However, his job is to obscure that fact. He doesn't want you to know that I am correct. If you don't know who Weebley is, then I feel sorry for you.
It seems to me that, if you could use your brain just a little bit, you wouldn't have to rely on Weebley making up your mind for you.
Hosea 4:6 My people are doomed for lack of knowledge.
Posted by memehunter on 04/12/12 11:50 AM
I agree with Ingo on several points, and I also agree about physical gold being an ideal store of value, but I don't understand his obsession with a fixed value for gold and a constant amount of work required to mine gold. Even if it were true, it's irrelevant in the big picture.
The reason why gold is an excellent store of value has very little to do with "the amount of joules required to mine and refine a certain amount of gold [being] constant" (assuming for the sake of argument that it is true), it has far more to do with gold's durability, fungibility, and high stock-to-flow ratio.
Posted by clark on 04/11/12 11:15 PM
If you're not even going to bother reading the link "Constitutional Convention of 1787 was in fact an illegal coup d'état." ... then how the heck can you even comment on it, and especially like that?
From, America's Self-Contradictory Constitution and Bureaucrats' Illegitimate Monopolies:
"... No "Constitution" holds monopolists accountable - that's a fantasy, a dream that can never come true, because of human nature, and because no human being is an angel." ...
Click to view link
Bischoff wrote, "The amount of joules required to mine and refine a certain amount of gold is constant."
You were just given an example of how this is a false statement, i.e. dredging in South America. Therefore the value of gold is Not constant.
Posted by Bischoff on 04/11/12 12:04 AM
C: "Constitutional Convention of 1787 was in fact an illegal coup d'état."
B: Brilliant... !!! Boy, the "black helicopter" crowd is really at it again.
C: "My point was, the Dollar price of gold reflected a drop in gold value that does not seem to include the work (joules) formula as you present it."
B: No, the value of gold does not change. The amount of joules required to mine and refine a certain amount of gold is constant. Therefore the value of gold is constant.
However, what rose in value was the fiat USD/FRN, or at least so it appeared. In reality, it didn't. There were an untold number of naked contracts sold into the markets from 1994 through 2000 in order to make the USD/FRN appear more valuable.
I don't provide links, but you can get the information about gold manipulation by googling GATA and Bill Murphy.
Posted by clark on 04/10/12 10:04 PM
My very best 15 minute response:
Bischoff wrote, "By your comment, it seems that you have given up on the idea of the framers. The tax man has no right to your gold nor your seed potatoes. Get rid of the 16th Amendment, and you won't have to worry about the "taxman"."
Someday, over the rainbow?
"given up on the idea of the framers"? Psft, it does not matter what I think, the majority like it like this.
At any rate, things were messed up from the beginning. From, Conspiracy in Philadelphia:
"I provide 400+ pages of evidence that the Constitutional Convention of 1787 was in fact an illegal coup d'état."
Click to view link
Bischoff wrote, "Mining gold anywhere in the world at the uniform expenditure of work"
Uniform expenditure of work, is that like the average American family with 2.5 kids? I say there is no such thing as, uniform expenditure of work.
Gold mining will Never be completely open to world wide competition without One World Goberment or a world with very limited government that is so far from where we are now it's hard to envision. So you can Never draw your conclusion until then, therefore it's invalid.
The work (joules) required to mine a specific amount of gold was not the same for Spanish Conquistadors as it was for those who mined it and were not paid, therefore work (joules) wasn't a factor in the price, er I mean, value placed on gold. How can that be, in your, work (joules) formula? How is that gold factored in today to that formula?
Bischoff wrote, "You could not have sold a suit for gold in 1999 nor in 2012"
Are you certain of this? Is it a known fact? If it did happen was it a commodity barter exchange?
My point was, the Dollar price of gold reflected a drop in gold value that does not seem to include the work (joules) formula as you present it.
Bischoff wrote, "While this whole Prop 13 disaster may have skipped some of the mid-Western states, it did plenty of damage on the two coasts."
And that's what I was trying to point out. The housing bubble wasn't due to Prop 13. High real estate prices in CA might have been due to Prop 13, but not the housing bubble.
Also, you assume too dang much. I'm quite aware of the effects the CA equity locusts had on the neighboring states.
Bischoff wrote, "When you limit the real estate value tax, the price of the real estate goes up."
Only it takes a few more ingredients for that to pan out into a national housing bubble: The Feds easy money train And lax lending standards. Without those two the value tax can Not create a bubble all by itself.
Where would CA equity locusts be without things such as Fed fueled N.I.N.J.A. loans? I'll tell ya, sittin' and wishin' is where.
Posted by Bischoff on 04/09/12 11:21 PM
C: "The tax man and the thief (or do I repeat?) come after the pile of gold, and the equipment and stock of the potato seed company, all the same."
B: There you are. Just because your grand parents or great grand parents were bamboozled to support the ratification of two UNCONSTITUTIONAL constitutional amendments, it doesn't mean that you have to bow down to them.
Just because there is an Income Tax amendment, it doesn't mean that the 16th Amendment reflects the intent of the framers. They did not want to have labor or wealth taxed. By your comment, it seems that you have given up on the idea of the framers. The tax man has no right to your gold nor your seed potatoes. Get rid of the 16th Amendment, and you won't have to worry about the "taxman".
C: "Also, People need to eat before they want to own gold."
B: Yes. Dottie asked me that same question. People normally make sure they sustain themselves in the present, before they think about sustaining themselves in the far future. The purpose of gold is to be able to sustain yourself in the future. Normally people consume 90% of their income, and they save 10%. Except, if you cannot redeem your earnings for gold, or if you cannot invest your gold for interest, then it's difficult to save. It is ttherefore that the government guarantees you survival in old age with Social Security. That leaves you free to spend 100% of your earnings on present consumption.
C: Those "lines" must have expanded when gold from the New World arrived in Spain?
B: Your logic is totally off. What does a total quantity of gold have to do with the work (joules) required to mine a specific amount of gold... ??? Your mind is ankered in the Quantity Theory of Money. As long as you cannot escape that frame of mind, you'll never understand what I am talking about.
Spanish gold was used as currency. That's a quantity thing. Mining gold anywhere in the world at the uniform expenditure of work (Ricardo and Marx calculation) is a quality (value) thing. As to the constancy of annual production, when the gold mining is completely open to world wide competition, then you can draw a conclusion as I did.
C: I mean, the very same suit you could buy in 1999 for one ounce of gold does not cost one ounce of gold today.
B: You could not have sold a suit for gold in 1999 nor in 2012. During this period of time there did not exist a redeemable currency anywhere in the world. You can compare fiat currency prices to gold for any good or service prior to August 15, 1971, but not thereafter.
C: "It sure does seem like you're saying gold has intrinsic value."
B: If you find that gold in a vein in the earth has value, then gold has intrinsic value. However, if you have to dig it up and refine it, then it doesn't have intrinsic value. Gold takes on value as you apply work to mine and refine it.
C: "Bischoff wrote, "California real estate the minute Prop 13 passed."
What's that got to do with the rest of the nation?"
B: Gees... .where have you been... ??? Prop 13 is an attempt to shift taxes from the real estate interests onto the home owner and wage earner not just in CA, but all across the country. When you limit the real estate value tax, the price of the real estate goes up.
That's exactly what happend in CA after Prop 13. Over the next 25 years, the real estate inflation travelled from Silicon Valley to the Boston Corridor and all up and down the East Coast. It travelled up the West Coast to Washington State. In the 1980s, Washingtonians almost stoned people with a CA license plate, because Californians were screwing up the real estate values in their state. The real estate speculation skipped Oregon, because Oregon has a high real estate value tax, in lieu of no sales and no income tax. NV and AZ have been the recipients of the fall out from the CA real estate speculation. While this whole Prop 13 disaster may have skipped some of the mid-Western states, it did plenty of damage on the two coasts. If the rest of the 49 states ever figure out how much they have to pay to keep CA afloat, where 70% of real estate is under water, there'd be a revolution tomorrow morning.
I don't know, but you must live under a rock not to be aware of what I point out.
Weebly will chime in soon enough. He'll spin my comments to confirm your notions. Don't worry.
Posted by clark on 04/09/12 06:20 PM
The tax man and the thief (or do I repeat?) come after the pile of gold, and the equipment and stock of the potato seed company, all the same.
The purchasing power of the potato seed company owner was likely preserved in 1999, not so the gold owner. Also, People need to eat before they want to own gold.
Bischoff asked, "Tell me how do you measure an inch... ???"
With lines separated by distance.
Those "lines" must have expanded when gold from the New World arrived in Spain?
If you do not know what amount of joules is required to produce 1/20.65 of an ounce of gold, then you can Never measure it in that manner. Also, the decrease in the cost to produce it in some areas Had to have effected the overall world cost to produce. And yet... ?
I mean, the very same suit you could buy in 1999 for one ounce of gold does not cost one ounce of gold today. The gold didn't change, the suit didn't change, perhaps the value of the suit changed some (I doubt that) or more likely, the value of the gold changed. How can that be if the value of gold is determined by a constant you might refer to as world joule unit cost?
It sure does seem like you're saying gold has intrinsic value.
Bischoff wrote, "California real estate the minute Prop 13 passed."
What's that got to do with the rest of the nation? The Fed's easy money is what the nation had in common, and other rules and regulations manipulated and twisted, this is the stuff of bubbles, not what they do in the people's republic of CA. I don't recall CA. policy ever affecting Midwestern real estate before, and there were plenty of before's.
Posted by Bischoff on 04/08/12 07:58 PM
FP: "I doubt the veracity of this claim. Can you provide hard numbers to back this incredible claim? Ideally, you should be using Joules to measure work."
B: No, I cannot provide you with hard numbers. I wish I could. However, the central banking crowd which funds and controls the business school research grants would never fund such a project looking into the utility of gold as a standard of value.
I come at this by looking to at past attempts to "mass produce gold". In the Middle Ages, the alchemists made great efforts to chemically produce gold, rather than having to dig it up. After 500 years of trying, the results were "zero".
Then, when looking at "modern alchemists" using electronic means to physically mass produce gold, I find the their efforts again produced "zero" results.
That leaves the fact that the only way gold can be produced is by digging for it. Gold is found in different concentrations both in the ground and on the earth surface. To get at gold requires the expenditure of work. At a minimum, a gold miner needs a pick, a shovel and a basket, or a washing pan. With the application of "labor" (human exertion), and the application of "capital" (pick, shovel, basket, washing pan) applied on or to land gold is produced. I admit that arriving at the value of gold in this fashion is employing the Ricardian or Marxian labor theory of value.
FP: "If you are going to try and revive the labor theory of value, you better put up a better defense."
B: Unlike the labor theory of value put forth by David Ricardo and Karl Marx, which requires the quantification of all past labor involved in the quantification of a particular good, Adam Smith's labor theory of value, to which I subscribe, does not require the quantification of all past labor, nor does it deal with the labor needed to create the tools (capital) that might be employed in the production of a particular good.
The Smith theory of value, is very much similar to the later utility theories in that Smith proclaims that a commodity is worth whatever labor it can command in others (value in trade), or whatever labor it can "save" the self (value in use), or both. Adam Smith considered the "value" to be subject to market forces at a particular time.
My explanation about gold as the standard of measure does employ the quantification of labor, and the labor needed to create the tools (capital) that used in mining and refining of gold, but that is it. Gold thereby becomes the measure of "value", just like a certain length of a titanium rod becomes the measure for a "meter".
Adam Smith's RBD currency works ideally in conjunction with the value of gold as the standard of value arrived at with by using the labor theory of value.
In a "free market" distribution system, the interest of the buyer coming to the market rests on marginal utility for the goods.
However, the interest of the producer/seller rests on profitability from selling the goods. Gold as an objective standard of value lets the producer/seller determine his profitabilty, and it lets him decide to continue to produce a particular good or to switch production to another good. At the same time, the buyer still subjectively determines the utility the good the producer/seller offers.
Since Gold cannot be mass produced through either chemical or physical processes, and since the contribution by "labor" and "capital" to the production of gold tends toward an equilibrium between the two, the overall expenditure of joules (work) to mine and refine a specific quantity of gold should remain constant. Past production figures tend to bear this out, though I'd much prefer scientific numbers as a result of an actual research study. If those numbers came in loule measurements, I'd be thrilled.
Also, past use of gold as the standard of measure incorporated into a paper currency by making it redeemable, has proven to be quite successful. The subversion of the gold standard was not brought on by the people. It was brought about by the bankers.
Posted by Bischoff on 04/08/12 05:48 PM
C: "A potato seed company might fit the slot of gold just as well in this example and for many of the same reasons. I'm not certain, but it seems the risk to holding a large pile of gold is just as high as running a potato seed company."
B: Please, tell me you are kidding.
C: "Bischoff wrote, "everything has a price, except gold." Then how does a Person measure its value?"
B: You don't measure the value of Gold. Gold is the Measure of value. It is the amount of work required to produce a certain quantity of gold. Initially, for the USD it was the number of joules (work) required to to mine and refine 1/20.65 ounces of gold. The amount of joules required to produce 1/20.65 of an ounce of gold is the measuring unit by which the value of any other good and service determined. This value so determined as a fraction of the value of gold is called a "price", and it is expressed in USD, not in joules.
I am afraid, but you'll never understand that gold has no price, unless you can get it through your head that gold itself is the measuring stick. Tell me how do you measure an inch... ???
C: "An ounce of gold historically bought one fine men's suit. Except when it didn't, i.e. in 1999 a fine men's suit didn't suddenly drop to $250."
B: Dream on. An ounce of gold during Roman time bought a fine toga and a good pair of sandals. If you want to buy a tailor made wool suit and a first rate pair of leather shoes, it sets you back an ounce of gold. Believe me.
That does not mean that you cannot buy a suit for $250. The question is what you mean by "fine".
C: "My point was, no one called housing a bubble in 1998, but really it was a beginning."
B: Nobody called housing a bubble in 1998... ??? I knew housing was going to grow the biggest bubble in California real estate the minute Prop 13 passed. By 2005, the real estate value per sqft in 21 California cities exceeded that of those in downtown Manhattan. When the MBSs in Scotland and France went bust, I knew it was the end. When Paulsen had to run to the Congress to get TARP passed within 48 hours, all I had to do was to buy puts on Bank ETFs. The rest is history. I was totally confirmed in my understanding how it all works.
That's why I disagree with you. A "housing bubble" and how it is caused, cannot in any way be compared to what you call a "gold bubble".
You have to understand gold to know that there can never be a "gold buble". There can only be a bubble in the currency used to quote a "price" for gold, but never in gold itself.